A new report released by the Australian Workers’ Union (AWU) has received criticism from APPEA’s Chief Executive Officer, Dr Malcolm Roberts, for being disconnected from economic reality.
Dr Roberts said the AWU Shipping Away Our Competitive Advantage report’s central claims do not withstand scrutiny.
“The report ignores the latest independent data, such as the Gas Price Trends report to the Council of Australian Governments (COAG) and the December 2017 report from the Australian Competition and Consumer Commission (ACCC),” Dr Roberts said.
“These reports show that wholesale gas prices began to fall in 2017 across all east coast states. The AWU writes about $22/GJ gas, but the COAG report finds that east coast wholesale prices average $9.19.
“It is revealing that the AWU ignores the latest ACCC report (December 2017) and uses out-of-date data from the September 2017 report. The facts may change but the AWU campaign doesn’t.”
The AWU report aimed to outline core policy changes needed to stop Australians paying more for their own gas than foreign customers.
Policy changes in the report include:
- A mandated ‘flexible minimum gas supply requirement’ that would require LNG producers to supply the domestic market adequately before earmarking gas for export
- A ‘use it or lose it’ provision that would mean if a gas tenement has been granted to an entity, that entity must invest in capital works that indicate its intention to extract natural gas
AWU National Secretary, Daniel Walton, said without a change of policy direction on gas exports, thousands of Australian jobs would be lost.
“On current projections one in five heavy manufacturers will shut as a result of high gas prices. Thousands of Australians working in the manufacturing sector are being forced to consider the prospect of the dole queue because their employers are struggling to afford to power the factories they work in,” Mr Walton said.
“The most frustrating thing about Australia’s gas price crisis is that it is entirely self-inflicted and entirely solvable. All we need is a Federal Government willing to stand up to the multinational gas exporters and tell them that while they can continue to profit from selling Australia’s gas to Asia they must reserve some for Australians as well.
“The notion that bringing stacks of extra coal seam gas projects on can save the day, cannot be the answer. Australia is already producing three times the gas we could use at home. And even if you could get community permission for more CSG, it takes years to bring those projects online, and within years we will see thousands of jobs lost.
“There are nervous communities across the nation who will be rightly outraged at the notion that Chinese customers are paying less for Australia’s gas than Australians. Your customers shouldn’t be paying less for your product than you do.”
Dr Roberts said this claim that Australians pay more for gas than other countries isn’t supported by facts.
“The International Gas Union’s annual global survey of wholesale prices places Australia 26th of 52 countries, with lower prices than major customers Japan, South Korea and China, and its two regional LNG export competitors, Malaysia and Indonesia,” Dr Roberts said.
“Putting aside the data – or rather the lack of data – supporting the AWU campaign, there is a deeper problem. The AWU seems to believe that it is better to shrink rather than grow the gas industry, with its thousands of highly skilled, high wage jobs.
“Export controls can only discourage investment in developing new gas supplies.
“The AWU’s protectionist approach would do nothing to expand supply or reduce the cost of new supply. Its flawed premise is that the LNG industry is a risk to domestic supply when, in fact, the industry has underwritten, directly or indirectly, most of the new gas developed over the last decade.”
Dr Roberts said the massive investment in east coast LNG projects brought the capital and technology to turn coal seam gas from an interesting idea into the main source of gas for local customers in eastern Australia.
He said the union should support the immediate removal of state government bans on natural gas projects rather than demand political intervention to restrict gas exports.
“It is no coincidence that Victoria, which has banned all onshore gas development, now has the most expensive wholesale gas in the market,” Dr Roberts said.
“The ACCC warned last year that southern states would continue to pay a premium for relying on Queensland gas – up to $4GJ in additional transportation costs.
“The obvious solution is for Victoria and New South Wales to develop their own substantial gas resources. More supply – and more suppliers – will put downward pressure on prices.”
